ChoicePoint fined $15 million for data breach and FCRA violations

ChoicePoint, the consumer data company that accidentally gave 163,000 records to an identity thief in 2005, was fined $15 million today by the Federal Trade Commission. This is the largest fine the FTC has ever issued. ChoicePoint received this penalty for "handling personal data carelessly" and violating the Fair Credit Reporting Act.  About 800 people became identity theft victims before this crime was discovered.

Thursday's action generally won praise from consumer groups. The FTC penalty "is a lot of money," even for a big company like ChoicePoint, said Chris Hoofnagle, West Coast director of the nonprofit Electronic Privacy Information Center. "It shows that the FTC is getting serious about security."

ChoicePoint still faces private lawsuits over the data breach. The Securities and Exchange Commission also is investigating whether Chairman Derek Smith and President Doug Curling improperly sold company shares before the breach became public.

This fine is a huge step in the fight for data privacy in the business world. What I find surprising in this announcement is that $15 million dollars is only 10% of ChoicePoint's annual profit; not revenue but actual profit after all their operating costs. Even after this charge, ChoicePoint reported $258 million dollars in revenue just during the last three months of 2005. ChoicePoint is making huge amounts of money off collecting consumer data (without our permission) and reselling it to businesses. And they've been making this kind of huge money for years, without protections to keep consumer data from thieves. 

I don't know about you, but I am going to order my free FACT Act disclosure report from ChoicePoint today. To request copies for your claims history report from ChoicePoint, call 1-866-312-8076. To request a copy of your employment history report, call 1-866-312-8075. To request a copy of your tenant history report call 1-877-448-5732. Take control of your records today!

Comments

[SM2joe]

How is ChoicePoint any different than the credit bureaus though? They collect data without permission too.

[EmilyPeters]

The credit reporting system is actually a fairly open data collection business these days (it wasn't in the past). Credit bureaus collect data from your creditors and store it to provide to businesses when you apply for new accounts. With credit bureaus, the consumer is actually a part of the system. You know which accounts are being tracked, you know when your credit data is being used and you can opt-out from having it used for pre-approvals.

Plus, you can remove yourself of the credit reporting system by not having any credit cards or loans. With ChoicePoint, you can only opt-out by not having a job, insurance or apartment...a much less realistic scenario.